Executive Level Analysis? Summary? What do you agree with? What you not agree with? What would you change ? Why would you make

34 SPRING 2015 | BOOK BUSINESS34 SPRING 2015 | BOOK BUSINESS

T echnology has not only changed what we offer to the marketplace—it has also infl uenced how those offerings are sold. The abil-

ity to sell things online has had a pro- found impact on our economy as a whole. Research and consulting fi rm Forrester projected U.S. online retail sales during the 2014 holiday season to reach $89 billion, a 13% increase from the same time period in 2013. Mobile commerce is only fueling this growth.

Curiously, many publishing organi- zations do not have the capability to take orders and execute payment transactions online from their website. To those out- side the industry, this lack of ecommerce seems preposterous—proof positive that book publishers are incorrigible Luddites, ostriches with heads fi rmly in sand. However, those with a deeper knowledge of publishing’s distribution ecosystem and publishers’ economic realities know that there are some valid reasons why publish- ers have not made ecommerce a priority, and consequently why many in the indus- try do not have that capability today. Many publishers made well-reasoned business decisions not to invest in online storefronts based on the facts and a rough calculation of a return on such an investment.

Existing Channels Are Suffi cient For many, the principal reason for not cre- ating an online storefront was that online selling was not consistent with the pub- lisher’s channel strategy and would not

bring in enough additional rev- enue to warrant the investment. Existing channels, they reasoned, appropriately handled current sales opportunities.

For trade publishers, online market- places such as Amazon most appropriately serve consumers. Trade customers don’t conduct a search for books by going to a publisher’s websites, but rather to a com- prehensive marketplace where all publish- ers are represented.

Institutional librarians have expressed a preference to purchase through inter- mediaries that aggregate titles from mul- tiple publishers. For both print and digital titles, librarians prefer the effi ciency of buy- ing through a third party channel, such as Overdrive, as opposed to buying from indi- vidual publishers.

Educational publishers that serve mar- kets at the primary, secondary, or higher education level must conform to estab- lished high-touch adoption sales processes, typically with a direct sales force.

While the specifi cs may vary from mar- ket segment to market segment, publishers concluded that online storefronts would not yield signifi cant additional revenue. Worse, online sales might disrupt existing distribution relationships through channel confl icts, threatening existing revenue.

The Money Pit The second fundamental reason publish- ers have questioned whether to create their own storefronts is cost. Businesses have been creating ecommerce sites in earnest for around fi fteen years. In the early years

of ecommerce, creating an ecommerce site represented a signifi cant capital technol- ogy investment. A high level of technology integration was required, if not outright software development, to create the desired shopping experience for the customer and fulfi llment processes. Ecommerce initiatives in the early days were risky, complex, and became a career Waterloo for many exec- utives for whom the initiative got out of control. Without a clear projection of the new revenue ecommerce channel would generate, it was diffi cult for publishers to justify the investment of an ecommerce site.

A Need for Reassessment The time has come for many of those pub- lishers who earlier decided not to develop or acquire ecommerce capability to reas- sess their decisions. Many will fi nd that after fi ve to ten years, previous assumptions about ecommerce are no longer true.

The cost and complexity of imple- menting online transaction capability have been lowered substantially for publishers over the past ten years, driven by a num- ber of factors:

Vendor-Hosted Ecom: A wide-range of ecommerce software-as-a-service (SaaS) providers can now offer a hosted ecom- merce capability to publishers effi ciently and economically. SaaS providers enable a

Ecommerce Reconsidered

Andrew Brenneman D I R E C T I O N S

You Might Need a Shopping Cart After All

Follow Andrew @andrewbrenneman

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BookBusinessMag.com | SPRING 2015 33

publisher to have its own branded store- front without building it themselves.

Existing Infrastructure: Compared to ten years ago, today publishers have gen- erally put in place the other systems that ecommerce requires, such as a market- ing website, CRM systems, and electronic catalogs. Ten years ago, publishers did not always have these components in place, which significantly increased the cost of an ecommerce project.

Easier Payments: To provide complete transaction capabilities, ecommerce sites connect to a payment gateway that allows the publisher to connect to the banking system to complete the sale. Payment gate- way providers, such as authorize.net, have significantly expanded the services they provide, such as securely managing custom- ers credit card information and supporting recurring payment plans. This means there is less functionality that publishers need to implement to provide a full-featured ecom- merce site. The payment gateway providers do a lot of the heavy lifting.

Evolving Consumer Behavior Equals Greater Revenue Potential For many customers, publishers are in fact the preferred point of sale, and ecommerce a preferred method of transaction. Many trade publishers have developed brand equity that has led to customer engage- ment and loyalty. Based on the brand rela-

tionship, customers often wish to engage directly with publishers to buy. Publishers such as Scholastic and Harlequin have shown that a strong brand and an edito- rial focus enable publishers to engage with and sell to their customers directly, and the customers prefer doing so.

Trade marketplace and aggregation channels are not a fit for many profes- sional publishing segments. Professionals in such fields as law, healthcare, and engi- neering, do not buy authoritative profes- sional content through consumer market- places. Professionals have focused interests and have little motivation to buy omnibus offerings from aggregation channels that serve institutional librarians. Professionals and corporate librarians already know the publishers that are authoritative in their fields, and do in fact start their product search with these authoritative publishers. Ecommerce is the most relevant approach for publishers who wish to pursue non- academic enterprise and professional mar- ket opportunities.

Customers of educational publishers are grumbling for change. Educators and educational institutions have expressed a desire for greater flexibility in what and how they buy. They seem to feel locked in by the traditional adoption of a single comprehensive text, and have communi- cated a desire for acquiring publisher con- tent in smaller chunks, sometimes referred to as learning objects. In order to fulfill the vision of modular content offerings, edu- cational publishers need to not only create

content in a more flexible fashion, but to be able to sell it in a more dynamic, nimble fashion: just-in-time sales and just-in-time delivery. The long-cycle textbook adop- tion sales model is incompatible with the learning object product vision.

For all customer types, an ecommerce site is not just a place to buy, but also a place to check on order status, to see what is new from the publisher, and to admin- ister their customer profile information. A company that provides a well-designed commerce experience is seen as provid- ing a higher level of service to customers.

How Much Ecommerce Revenue Are You NOT Getting? With significantly lowered implementa- tion and operating costs, and increasing evidence that suggests higher revenue can be expected from ecommerce, it is critical that all publishers reassess decisions they have made in the area of ecommerce, as some key assumptions may have changed.

There is a Catch-22 here: Publishers feel they can’t afford ecommerce since his- torically they have not generated ecom- merce revenue, which is only because they did not have a viable storefront to begin with! And that is the key point: Without true ecommerce capability how does one know how much revenue is currently being lost? With lowered implementation costs, publishers can now find out. x

Andrew Brenneman is founder and president of Finitiv (www.finitiv.com).

ECOMMERCE RECONsidEREd (continued from page 33)

offerings such as iLit, a comprehensive digital reading intervention solution with a research-proven instructional model for grade 4-10 learners. It is specially designed to help readers who may be as much as 2-4 grade levels behind master essential skills and get back on track. Our educators who are using the software in the class- room rave about the results they are seeing and have let us know that our software is key to their student gains. x

T H E C O R N E R O f f i C E (continued from page 15)

that restrict content to a single retailer. Advances and adoption of ebook formats like EPUB 3 will open new opportunities for publishers and authors.

Print-on-demand creates new oppor- tunities for us to deliver printed books as well, especially as machines that can pro- duce one-at-a-time, beautiful books evolve.

I love great beer, and great books, and great authors. I am passionate about the topics I read, I know the publishers that

publish for me, and I know the authors that share their wisdom. I want to listen to their authentic voices, connect with them, support them, buy from them, and read with them. I am not alone. x

Doug Lessing is president at Firebrand Technologies, a provider of publishing systems and technologies.

G u E s T C O l u M N (continued from page 9)

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